What is a trade deficit?

A trade deficit occurs when a country's imports surpass its exports. In this scenario, the country is buying more goods and services from foreign markets than it is selling to them. This situation can indicate that the country is relying heavily on foreign-produced goods, which might lead to an imbalance in its national accounts. It's essential to understand that a trade deficit can have both positive and negative implications; for instance, it might reflect strong domestic demand or economic growth, but it could also suggest that a country is accumulating debt to finance its consumption.

The other options reflect different aspects of trade. Having exports exceed imports describes a trade surplus, while a balance where imports and exports are equal indicates a balanced trade situation. The practice of exporting more than producing domestically is more about export-oriented production rather than the concept of trade deficit directly. Thus, the definition of a trade deficit aligns exclusively with the scenario provided in the correct answer.